“‘Emergencies’ have always been the pretext on which the safeguards of individual liberty have been eroded.” F. A. Hayek

Over the past few years, energy and climate, two previously unrelated subjects have become conjoined in a way that demands that one cannot be discussed apart from the other. This confluence is largely due to the efforts of former Vice-President Al Gore, Jr. and a well-choreographed procession of activists to link energy and climate. Interestingly, they know absolutely nothing about the former and can do nothing about the latter. Nevertheless, this lack of knowledge and power has not deterred their resolve to replace our complex energy industry with windmills and corn stalks and dictate global temperatures. If the stakes were not so high the spectacle would be amusing.

This convergence could not have been achieved apart from a generation of media propaganda combined with an increasing portion of the population that no longer labors to produce fuel and power for themselves. While the media foist relentless attacks upon oil and gas companies more and more Americans reside in metropolitan areas far removed from the understanding and production of energy. (Given the state of the debate it is appropriate that the authors of the so called “American Clean Energy and Security Act”, Henry Waxman and Edward Markey, reside in Beverly Hills and Boston.) Ironically, the continuous and reliable supply of fuel and power provided by domestic energy producers has made them contemptible in the mind of the citizens and a suitable culprit for problems that they don’t understand.

It is hard to believe that after arguing that we could save as much energy by simply “getting tune-ups and keeping our tires inflated” as we could gain by tapping our enormous reserves of off-shore oil, candidate Barack Obama went on to become President of the United States. If is also difficult to fathom that Speaker Nancy Pelosi was able to strong-arm a terribly flawed Waxman-Markey bill (Cap and Trade) through congress after announcing that “natural gas is not a hydrocarbon” (it is). Once again, Americans who take for granted the most reliable and affordable supply of energy in the free world continue to overlook ludicrous misstatements of fact about the subject. For too long, career politicians, who have no earthly idea what they are talking about, have gotten away with spouting platitudes like “earth friendly”, “green jobs”, “clean energy”, “windfall profits” and “dirty oil” to shape the energy debate. These empty slogans have found their way into the national lexicon and are now repeated by print media, network anchors, cable news broadcasters, schoolteachers and students who in turn have no idea what they are talking about.

The Administration insists that hydrocarbons are “making the planet sick” and that Cap and Trade will create millions of alternative energy jobs. Our national energy policy has been totally subverted by these suppositions. President Obama concedes that our transformation into a carbon free economy will not be without sacrifice and dislocation. Nevertheless, he moralizes that we are compelled to take courageous action for the sake of the planet and “future generations.” In other words, this is a big gamble, but we really have to implement “cap and trade” because the current energy policy is unhealthy and unsustainable. But what if Al Gore and Barack Obama are exactly wrong – or worse, what if they are shown to have conflicts of interest?

As reported by the Ed Barnes of Fox News, Barack Obama was a director of the Joyce Foundation which helped launch the Chicago Climate Exchange (CCX) in the early 2000s that will facilitate carbon emissions trading. Goldman-Sachs was President Obama’s largest private contributor in 2008 and coincidently owns 19% of CCX. Generation Investment Management, co-founded by Al Gore and former Goldman CEO and US Treasury Secretary, Hank Paulson, hold 10% of CCX. Commodities Futures Exchange commissioner, Bart Chilton, expects carbon trading to become a $2 Trillion market within five years. Given the direct economic enrichment that will accrue to President Obama’s political patrons it would be irresponsible and naïve to ignore this obvious conflict of interest and to assume that the administration’s enabling policies are altruistic. [1]

The three most important criterion any consumer of energy considers when he desires to access power or fuel are: Will it turn on? Will it stay on? How much does it cost? Our conventional energy industry (oil, natural gas, coal and nuclear) has a demonstrated record of providing Americans with the most affordable and reliable supply of energy in the free world, while alternative energy receives failing grades in all three categories. We are truly building bridges to nowhere if we are expecting wind, solar and ethanol to take us to the mythical carbon free world.

The wind turbines and solar panels promoted by the “clean energy” advocates provide less than 1% of the nation’s energy supply and are incapable of being scaled to impact our economy. Furthermore, their intermittency issues are fatal limitations for Americans who require a continuous power source. Ethanol has been so thoroughly discredited as a commercial fuel that only the most obstinate zealots continue to lobby for its mandated consumption and subsidies. So before we disassemble the greatest energy production and delivery system the world has ever known maybe we should take a breath and question the premises that undergird the climate-energy cabal:

What if hydrocarbons are NOT warming the planet?

Fact: Earth’s temperatures appear to have peaked in 1998 and have been cooling for the past decade. During this same period carbon emissions have increased. Hence the catch phrase “global warming” has been quietly replaced with “climate change” thereby allowing for all possible outcomes. [2]

What if we have no ability to significantly reduce the earth’s temperature?

Fact: The Obama Administration desires to reduce US emissions by 50% by 2050. This would equate to the horse and buggy emission levels of 1900 and according to the International Energy Agency would cost $45 trillion dollars. Climatologists project that this colossal effort might result in an inconsequential temperature reduction of .1 to .2 degree C. [3]

What if there will NOT be millions of new “clean energy jobs” and that alternative energy is actually a job killer?

Fact: Spain has lost 2.2 jobs for every 1 “clean energy” job that has been created. Most of the new jobs have been in the government bureaucracy. As one of the largest energy producing and consuming countries in the world job destruction in the United States would be far more dramatic. Even the Department of Energy’s own model projects a net employment loss if cap and trade is mandated particularly in energy and manufacturing. [4]

What if the only people lobbying for wind, solar and ethanol are those who stand to profit immensely from subsidies provided by our tax dollars?

Fact: All of the so called renewable energy sources that President Obama favors rely exclusively upon subsidies, tariffs and huge tax credits in order to be economic. The American people will only use these inferior sources under compulsion. General Electric and Archer Daniels Midland will only manufacture wind turbines and distill ethanol with the promise of government assistance and taxpayer subsidies.(Ethanol receives 190 times the subsidy as natural gas per unit of energy produced. Wind and Solar receive 97 and 93 times respectively as much subsidy per energy unit produced as natural gas.) [5]

What if alternative energy sources are in fact unreliable, inferior and actually destructive?

Fact: Wind and solar are intermittent (the wind does not blow and the sun does not shine continuously) and cannot be commercially stored or easily transported. Therefore they can never be relied upon to supply power “on demand” but can only serve as a secondary or supplemental source of power. Ethanol is the “post office” of all transportation fuels. More energy is consumed in its production than a unit of ethanol contains. Once produced, the BTU (energy) content of a gallon of ethanol is 25% less than that of gasoline. Refiners are compelled by law to blend the so-called “biofuel” with gasoline which reeks havoc in fuel injection engines and water craft and of course decreases fuel efficiency of the vehicle. [6]

What if “alternatives” can never be produced in sufficient quantities to replace our conventional energy sources?

Fact: As of 2007 the United States derived 3.8% of its energy from alternative sources including ethanol (7% if hydroelectric power is included). According to the Energy Information Administration (EIA) the massive spending President Obama has mandated for alternative energy will result in an impressive 184% increase in the nation’s “clean energy” supply. Unfortunately, this will only equate to 7% of U.S. energy demand and will be the most expensive and heavily subsidized energy source ever produced. Mr. Obama has not yet informed us as to where and how we will dig up the remaining 93% of our energy needs. [7]

What if an ample supply of affordable energy is requisite to the economic prosperity and security of the nation?

Fact: Economic productivity and quality of life are products of energy consumption. Mechanized agricultural, transportation, air conditioning and adequate sanitation depend upon power and fuel. Developing nations understand this and covet access to hydrocarbons. Adequate energy is also essential for military armaments and transport. Therefore, our global competitors (and potential adversaries) China and Russia are engaged in a contest to capture large reserves of oil and gas in Africa, South America and around the world. They are not interested in politically correct but unviable energy sources like solar and wind. India and China have informed Secretary of State Hilary Clinton that they would be pleased for the United States to sign Kyoto or self regulate its own carbon emissions but that they most certainly would NOT. On August 12 of this year the Australian Senate rejected legislation that would have created a carbon tax and trade system by a vote of 42 to 30. It seems these countries intend to grow their own economies. [8]

What if we DO have sufficient supplies of coal, oil, natural gas and nuclear power to sustain us for the foreseeable future until economic alternatives are developed?

Fact: The BTU content of US coal reserves exceeds the energy content of the oil reserves in Saudi Arabia. The oil shales of Western Colorado are estimated by the Department of Energy to contain 1.5 Trillion barrels of oil equivalent and the Energy Information Agency estimates the country has a 90 year supply of recoverable natural gas (1,744 Trillion Cubic Feet). Successful exploration efforts in Louisiana and Pennsylvania promise to augment this estimate. [9]

What if the cost of fossil fuels has risen less than the rate of inflation over the past 30 years?

Fact: Even with the oppressive regulation and taxation of the energy sector the cost of energy consumes less of our Gross Domestic Product or of household income that it did 30 years ago. This despite the constant hand-ringing and apocalyptic warnings of the media. Furthermore, gasoline, which is simply a component of transportation, has increased in price far less than automobiles that are the largest component of transportation. This reality is reflected in the financial performance of oil and gas companies who consistently shows earnings in the middle range when compared with other industries. It should be noted that oil company profits often run countercyclical to the broader economy. For instance, during the historic expansion of the late 1990s when ten of the largest DOW components enjoyed average earnings of 15.69% and individual retirement accounts inflated like never before, major oil companies experienced only 3.99% profitability and many independent oil companies actually lost money or suffered bankruptcy. However, even during the high oil and gas prices of 2006 through 2008 the major oil companies earned less than 10%. [10]

What if “Cap and Trade” is a giant scam designed to reward politically connected corporations by creating skyrocketing energy prices on the backs of the American people?

Fact: Cap and Trade will burden the real energy producers with additional regulation and taxation rendering usable energy rare and expensive. It will reward opportunistic Wall Street firms like General Electric and Goldman Sachs. GE will manufacture the obtrusive wind turbines while Goldman orchestrates the climate trading labyrinth. The difference between Cap and Trade and Las Vegas is that the American taxpayers (the “players”) can’t possibly win and the President’s Wall Street cronies (the “House”) can’t possibly lose. At least the suckers playing the slots on the strip have a mathematical chance.

The foundation of our entire energy policy is based upon falsehoods. These false choices create an illusion that would require the abandonment of our abundant natural resources and the energy technology that has been developed over the last century. Now we learn that those attempting to mandate our energy choices have maneuvered themselves into position to be the primary beneficiaries of their own legislation. But if the very premises of the argument are false and if their implementation would be ruinous, then their exposure and defeat are vital. A sound energy policy is essential to the economic well-being and the national security of any nation. Abundant, reliable and affordable fuel and power is fundamental to the prosperity and quality of life of the American people. It is high time that those of us who know better speak up before President Obama’s policies shackle us to the windmills and Dutch ovens that our great grandparents forsook a century ago while he oversees the largest transfer of wealth in American history.

[1] Assumes 12,000 miles annually based upon average new vehicle costs [$8,912 for 1981 and $27,800 for 2006], average fuel efficiency [13.2 for 1981 and 21 for 2006] and average costs of regular gasoline [$1.35 for 1981 and $2.58 for 2006] including light trucks and SUVs.

The chart below compares the profit margins of the independent and major oil sector with the profit margins of ten widely held non-oil companies from 1997 to 1999. Average NYMEX oil price of $16:

[2] Higher prices allowed major oil companies to increase dividends to their shareholders while also increasing capital investment by 36% over the 1997-1999 period,

The oil and gas industry is the most heavily taxed sector in the United States. In addition to income taxes, the industry pays severance and property taxes calculated upon gross production as well as import duties, sales and use taxes. Severance taxes in Texas alone exceeded $5.7 Billion in 2006. Taxes paid by the three largest U.S. oil majors in 2006 were in excess of their profits as shown below:

It has become fashionable to excoriate our country for consuming almost 25% of the earth’s oil and yet comprising only 3% of the planet’s population. However, it is seldom mentioned that the United States and Western oil companies are responsible for the discovery of the majority of the world’s oil reserves. When the equation is turned around it could be argued that America has been quite generous with the energy resources that it has discovered, produced and shared with the rest of the world. Imagine what the price of oil might be and how precarious it’s distribution had China or Russia been responsible for the tremendous risks and investments necessary to capture the majority of the earth’s hydrocarbons. Economic output is almost perfectly correlative to energy consumption which explains why the United States generates over 25% of the worldwide GDP while comprising only 3% of the population. Once again, when the “population versus consumption” equation is viewed from a “population versus productivity” perspective a very different picture emerges.

Although wealthy Europeans and Americans may apologize for their energy consumption, developing nations envy the availability of affordable oil and gas that we enjoy. Furthermore, they wish to participate in the personal comforts and economic productivity that ample supplies of oil and gas make possible. Because of a vibrant domestic oil sector we no longer require a whaling industry to provide northeasterners with heating oil in the winter. Likewise, it is no longer necessary to clear cut entire forests to burn in our wooden stoves. Petroleum provides the energy for mechanized tools that relieve the laborer of back-breaking toil. Capturing and harnessing energy is the key distinction between advanced industrialized economies and struggling third world countries. As pointed out in Dr. Michael Economides’ excellent book, The Color of Oil, the primary difference between our colonial ancestors and modern Americans is the utilization of energy for transportation, agriculture, manufacturing and air-conditioning. These advancements are attributable to fossil fuels.

It should be obvious to all that a sufficient energy supply is the prerequisite for every industry and every economy in the world. For the past 100 years hydrocarbons have provided the vast majority of the world’s energy demands. Whenever it becomes scarce or unavailable governments are compelled to take radical measures. Japan may have never attacked Pearl Harbor had President Roosevelt not imposed a naval blockade preventing oil tankers from reaching Japanese ports after the Rape of Nanking. Japan became so desperate for gasoline by the end of the war that they resorted to converting sake into fuel and clear cutting entire forests of pine trees that contained a syrupy substance that was distilled and used as crude oil. Germany’s finest military strategist, Field Marshall Erwin Rommel, was forced to deploy in North Africa to capture oil reserves instead of aiming his panzers toward London or Moscow. The purpose of the Romanian occupation was primarily to secure the Ploiste Oil Fields near Bucharest when German divisions were badly needed in other parts of the European theater. Adolph Hitler properly identified Ploiste’s grave importance when he stated, “If we lose the oil fields, we lose the war.” In 1943 and 1944 Allied B-24s bombed Ploisti. Conversely, a reliable supply of oil from fields in Texas, Oklahoma and California enabled our forces to engage in the Pacific and European theaters simultaneously and was a major contributor to U.S. victory in World War II.

Today, our large oil companies compete in the international arena with much larger national oil companies like Russia’s Lukoil and Gazprom and China’s SINOPEC. Whether we recognize it or not, we are engaged in a global race for reserves with far-reaching implications. Russia has recently made an aggressive claim upon the exploration rights covering much of the Arctic Circle. China is challenging Exxon’s right to explore in Vietnamese waters in the China Sea while the National Chinese Oil Company is drilling only a few miles off the coast of Florida. America’s energy plan is focused upon taxing it’s domestic oil companies and misspending the bounty on inferior and unreliable alternatives, some of which actually consume more energy than they produce. In the mean while, clear thinking Chinese and Russians are at work capturing the earth’s oil supplies.

History has demonstrated that the control of stable reserves of oil and gas is critical to the military and economic security of a nation. Those who fail to recognize this reality or prefer to ignore it do so at their country’s peril. While our public policies are unduly influenced by visions of a utopian “carbon free” society our adversaries are striking deals with Venezuela, Nigeria, Iran and Sudan while nationalizing the holdings of American energy companies. Furthermore, Russia and China have no reservations about exploiting the oil advantage once it is secured. On the contrary, they view petroleum equally as the economic fuel for their economies and the political currency with which they wield world power. For example, the Kremlin has periodically cut the flow of natural gas to the Ukraine when contractual disputes have arisen. The supply was most recently interrupted in January which also curtailed gas shipments to Europe. Russia currently supplies 50% of the natural gas to the European Union. Is there any doubt that the Kremlin will play the “oil card” if Germany or France were to fail to support Russian policies in the United Nations or elsewhere?

Lukoil and Gazprom serve the interest of Vladimir Putin. SINOPEC and CNOOC serve the geopolitical objectives of the Chinese communist leaders. Venezuelan oil profits support the grandiose visions of Hugo Chavez. Iranian oil profits serve the extremist aspirations of Mahmoud Ahmadinegad and the Shia Ayatollas. Thankfully, the success of our domestic oil companies accrue to the direct benefit of their shareholders being the tens of millions of Americans who hold their stock and indirectly to the security of our country. American policy makers and the American people must begin to understand that the control of oil and gas has become the chief geopolitical tool of those who wish us harm. We dare not allow politically correct but shockingly naïve policies to place us at the mercy of Venezuela, Iran, China or Russia.

“It is error only, and not truth, that shrinks from inquiry.” Thomas Paine

I live in Midland, Texas, which lies in the center of the most prolific oil producing province in the lower 48 states. Oil men refer to this portion of Western Texas and Southeastern New Mexico as the Permian Basin. According to geologists the region was at one time a tropical jungle surrounding the Permian Sea and was inhabited by dinosaurs whose remains provided the organic matter that would become fossil fuels. Today Midland receives rainfall of 12 inches annually and is a semi-arid desert with little surface water and sparse vegetation making it difficult to imagine the lush landscape that would have sustained the foraging of a 35 ton Apatosaurus. Obviously, a climatic shift has occurred. Greenlanders were farmers up until the 13th century. History records that the giant island began to cool in the 12th century and frigid temperatures created ice packs that impaired shipping lanes. Ultimately the islanders were forced to abandon their agrarian lifestyle and became sea faring adventurers who we remember as the Vikings. The record of the last surviving Greenland Vikings was in 1408. NASA astronomers have discovered that the polar ice caps on Mars are melting. If the warming trend persists the topography and environment of the Red Planet may be forever impacted with unknown consequences.

These three examples of seismic temperature transformations share a very significant common denominator. Greenhouse gases produced by human activity were totally absent. We can also draw the following inference from these events: Our earth and solar system undergo warming and cooling cycles that occur over centuries and millennia that mankind does not control.

It is seldom mentioned that the baby boom generation received a “coming ice age” education when we were in school in the 1970s. Therefore, we tend to be a little skeptical of the current fad. Senator Inhofe, (R-OK), chronicled the history of climate hysteria a few months ago on the Senate floor. He reveals that the recent warming consensus is actually a recycle of an idea first introduced in the late 1920s and is now repackaged for modern consumption. Temporary warming and cooling trends will continue to provide “evidence” for those intent upon corroborating a predetermined conclusion. A far more rational reaction would be to marvel at the remarkable environmental consistency produced by a sun located 93 million miles from a tiny planet traveling in a 584 million mile elliptical orbit while wobbling on a tilted axis.

Many environmentalists are so convinced of the truth of Global Warming and the culpability of human actions that dissenting viewpoints are not even acknowledged. They reason that the consequences of a warming earth as portrayed in such docudramas as “The Day After Tomorrow” and “An Inconvenient Truth” are so cataclysmic that it no longer matters if the underlying scientific premises are even true. Accordingly, their crusade no longer employs logic, fact or history to argue their position but simply declares that “the debate is over.” The projections arising from their dubious theory are presented as foregone conclusions – usually with artistic license. Those who reject or even question the correlation between greenhouse gases and Global Warming are branded as “Global Warming deniers” and deserve the same contempt and disdain due holocaust deniers and others who have committed crimes against humanity.

Those who have the independence and nerve to dispute the questionable science behind the global warming dogma are rarely permitted to have their voices heard. The October 27, 2006 “cease and desist” letter delivered to ExxonMobil from Senators Jay Rockefeller (D-WV) and Olympia Snowe (R-ME) provide an excellent case in point. Exxon has committed the unpardonable sin of asking hard questions about climate cycles and had helped fund think tanks that do not accept the Global Warming world-view at face value. It seems that they live in a world where new and unproven theories actually have to bear up to scientific scrutiny. Apparently, the good senators cannot tolerate skepticism (or free speech) concerning the absolute and undeniable truth of Global Warming. Exxon’s politically incorrect views are particularly dangerous when combined with their renowned commitment to good research, hard facts and their disregard of the speech police. Senators Rockefeller and Snowe have used this shot across the bow to let Exxon know that they had better watch their step. Regrettably, the senators’ Orwellian warnings succeeded and the company has discontinued support of free-thinking dissent.

It is important to understand the world-view of any politician or social activist because those internal convictions must influence his conclusions. Can any unbiased observer dispute the anti-capitalism, anti-energy tendencies of the global warming crowd? Is it any wonder that they are capable of re-interpreting any scintilla of data into the framework of their global warming presupposition? If the winter is mild the cause is global warming. Rain in a normally dry month is undisputable evidence of global warming. A Category 3 or larger hurricane is certainly caused by global warming. If it’s unusually hot in July global warming is the obvious reason. And yes, a cool day in August was surely caused by global warming. Like any conspiracy theory it can explain anything and can never be disproven. Whether the “crisis” is Global Cooling (1970s) or Global Warming (1990s) or Climate Change (2008) the causation remains “man-made carbon emissions.” This is the nonnegotiable foundation upon which their faith rests. Though their facts may be discredited their crusade will never be abandoned.

Mr. Gore and his cadre of Environmental Wahabis who ignore historical cycles, declare the debate to be over and ask nothing of themselves, propose draconian measures for the country. They insist that the United States ratify the Kyoto Treaty which would impose burdensome restrictions and regulations upon our economy. (Russia and China reeeeeally want us to sign Kyoto.) Secondly, they demand that congress pass new carbon and energy taxes that would redirect billions of dollars into “fighting Global Warming.” Thirdly, they are rabid supporters of corn-based ethanol that exacerbates gasoline supply and create food shortages. Lastly, Mr. Gore (like President Obama) divines that the new “green economy” will create jobs and expand the GDP. Once again, without logic, fact or compelling argument the dynamic “green economy” is proffered as another foregone conclusion. This comes from the man who may have invented the internet but had never actually created a single private sector job outside of his pilots, domestic servants or laborers on his inherited tobacco farm until he founded the “green” investment firm, Generation Investment Management.

It is interesting to contrast the resumes of Dr. Reid Bryson, (1920 -2008) with that of Vice-President Gore. Dr. Bryson held a Ph.D. in Meterology, Atmospheric Science and Geology and was Emeritus Professor at the University of Wisconsin and was known as the Dean of North American Meteorology and the Father of Climatology. He rejected theories of Global Warming caused by man’s production of greenhouse gases referring to the argument as “ludicrous.” (Dr. Bryson attributed changes in the planet’s temperature primarily to climate cycles and pointed out that if we are concerned about carbon emissions that their chief source is water vapor.) Vice-President Gore could be called the “Father of Global Warming.” Mr. Gore was an English literature major who dropped out of seminary.

It is a weak theory indeed that relies upon character assassination, intimidation, censorship and Hollywood docudramas. High energy costs and economic recession will be the first casualties of Kyoto should President Obama prove foolish enough to sign it. The greater tragedy will be the international consequences as we lose ground to China, India, and Russia who will not be as burdened by Kyoto’s restrictions nor are they likely to comply with any provisions that would regulate their hydrocarbon consumption or constrain their economic objectives. Apart from Kyoto, President Obama seems intent upon visiting similar calamity upon our nation through his own “cap and trade” legislation. This misguided scheme of carbon taxation and credit trading will create an army of bureaucrats who will proliferate complex regulations against certain industries while exempting favored sectors. Be certain that “carbon trading” will have little net affect upon emissions but will greatly empower government to meddle in the affairs of the citizenry and enrich the companies that will arbitrate this absurdity. (Al Gore is of course one of the early investors in this scam.) Expect the results to be higher domestic energy costs, a fatigued economy, demoralized entrepreneurs and the emergence of new world leaders, other than the U.S. Meanwhile, condescending politicians and celebrities will continue to lecture from the rear seats of their Gulfstreams and to profiteer from the hysteria that they have created.